By Cameron French
TORONTO, April 29 (Reuters) - Aurelian Resources (ARU.TO: Quote, Profile, Research) said on Tuesday it has laid off most of its workers and suspended drilling activity in Ecuador, and other Canadian mining companies were mulling similar moves following the country's decision to freeze exploration and revoke mining concessions.
Aurelian, a Toronto-based gold explorer whose main asset is the Fruta del Norte deposit in Ecuador, said it has reduced its work force by 80 percent, or about 360 people, in compliance a government decree that mining activity must be halted while it puts together new mining laws.
"During this mandated standby, we will continue to comply with obligations to the government and other stakeholders and to maintain our surface and mineral rights, facilities and assets in good standing," Aurelian Chief Executive Patrick Anderson said in a statement.
Other companies active in the region said they had not yet made decisions on layoffs.
Toronto-based Iamgold's (IMG.TO: Quote, Profile, Research) general manager, Jorge Barreno, told Reuters the company is reviewing its investment budget in Ecuador to decide whether to cut its 120 employees there. Iamgold owns the Quimsacocha gold deposit, which contains an estimated 3.3 million ounces.
A Corriente Resources (CTQ.TO: Quote, Profile, Research) executive said the company employs 150 people in Ecuador and is waiting for government instructions before deciding on layoffs.
Dynasty Metals & Mining (DMM.TO:
Quote,
Profile,
Research), which employs about 350 in the country, said it had not released anyone and has not halted activity yet, but was reviewing the situation daily and waiting for official orders from the government.
Ecuador's private mining chamber, meanwhile, said it expects about 2,000 workers at the largest exploration firms to lose their jobs during the freeze.
Ecuadorean Oil and Mines Minister Galo Chiriboga said during a meeting with mining firms on Monday that the government could put some workers on the state payroll to build roads.
SHARES TUMBLED
The government decree -- under which Ecuador will revoke most mining concessions but allow each company to choose three to keep -- sent shares of Aurelian and other companies active in the region tumbling when it was announced more than a week ago.
Since then, Ecuadorean President Rafael Correa has met with representatives of the companies to give assurances on the future of mining in the country, a move that prompted a modest rebound in the stocks, although many are still trading at around half their value of two weeks ago.
Aurelian shares fell 54 Canadian cents, or 11.8 percent, to C$4.02 on the Toronto Stock Exchange after its announcement on Tuesday.
Haywood Securities, which cut its price target on Aurelian shares following the initial news of the mining freeze, moved it back up a bit on Tuesday, to C$3.60 from C$1.40, citing the government's moves to downplay the impact of the mandate.
Dynasty's shares were down 50 Canadian cents, or 12.6 percent, at C$3.48, while other Toronto-listed players were little changed.
The government says a new mining law could be ready by late May, and it has started a series of meetings with mining firms, environmentalists and communities to draft the law.
Foreign miners say the exact extent of the decree is still unclear, but the government has signaled its support for big projects that could benefit the poor country with billions of dollars in revenues
